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Friday, April 1, 2011

Home F***ed-Up Home

So my last two posts have been about states passing dumb or infuriating laws that irked me. Continuing with that theme, I look to Sweet Home, Illinois.

Looking at the big picture, it's really hard to know where to start. There is so much craziness here lately. Like many states, our fiscal situation is well beyond "not good." The state is months behind on paying its bills, including money it owes to schools, service organizations, and private businesses, all of whom are having to lay people off because they can't afford to pay them if the state doesn't pay up for services already rendered. So we are adding to the unemployment numbers by making companies cut employees they wouldn't otherwise have had to cut. Some businesses have even gone out of business while waiting for the state to pay up. I guess that's one way for the state to reduce what it owes, just don't pay your debtors until they're forced to go out if business.

What has gotten us here is politics, plain and simple. Our politicians want to get re-elected, so they promise us better government services and lower taxes. A few years ago we started offering free public transportation to seniors. Why? Because Blago wanted to get re-elected and seniors are a HUGE voting block. If we are offering free public transportation to those who really need it, you know who could use free public transpiration more than seniors: poor people. It would make it easier for them to get jobs and become more productive members of society. You know who doesn't need free transportation? Middle class and wealthy seniors. You know who isn't a reliable group of voters? Poor people. But regardless of who could benefit from free rides the most, Blago didn't pay for it. Free rides for seniors, no plan on where the money that seniors used to pay and now wouldn't pay would come from. Details.

Full disclosure, I voted for Blago for his first term. But I also pretty distinctly remember the moment when he fully lost me. In 2003, Blago signed into law some pretty steep tax and fee increases for trucking companies in Illinois. At the time, truckers said that such large increases would drive trucking businesses out of Illinois. Supporters of the law claimed this was a group who was unhappy about a tax increase and were just trying to make the situation seem worse than it was.

To my untrained mind, this seemed, well, retarded. Government is offering a bajillion services and politicians don't want to upset the voters by raising their taxes, so they pick an industry and raise taxes on them. Well what do we think is going to happen? How hard is it to relocate your business on the other side of a state line. Seriously, folks, this isn't rocket science. If it's more expensive to operate your business in Illinois than it is in Missouri or Iowa or Indiana, why would you stay in Illinois?

A year later, the verdict was pretty much in. Thousands of trucking companies had already left the state, taking jobs and money with them. Again, DUH!

So that was back during the Blago era. Let's see how far we've come. A few days ago there was a big hullabaloo about Caterpillar leaving Illinois. CAT is huge in Illinois. They employ 23,000 people. Later, CAT CEO announced that CAT has no plans to leave Illinois, but that “policymakers in Springfield” are making it “harder by the day.” So a momentary respite; we have not yet driven away one of the biggest employers in the state. Good for us. Can we keep it that way?

Listen up Illinois: the party is over. We are up to our eyeballs in debt. The state can't pay its bills on time. This problem is not going to be easy to fix. It is going to mean fewer services. It is going to mean tax increases. It is going to mean that some public sector employees are going to lose their jobs. It is going to suck. But guess what... We, through our electoral choices and lax attention to our legislators, have dug this hole. And it is a deep f***ing hole. So the party is over and the bill has arrived and we are starting to realize that this is gonna' be hard for a while. Yes. Yes it is.

And this pretty much applies to the nation as well. You want the country out of debt, too? Then don't give me any garbage about how you can't have tax increases during a recession. You cannot fill the budget holes we've created through spending cuts or tax increases alone. You need both. And you're going to need to compromise on some of your other "core principles." I know compromise is a dirty word now, but that's how you make it happen. If you want the state/country to be out of debt and that's your priority, then you have to deal with the hard consequences that go with it. Sorry.

2 comments:

Since businesses aren't compelled by a strategic advantage to operate here they are free to migrate to tax havens. The only businesses forced to operate here are ones that cater directly to the public like restaurants and retail but taxing them amounts to an indirect local consumer sales tax.

Ideally you would tax businesses that are forced by strategic significance to produce locally but export goods so that the foreign consumer is contributing to the local tax bill. Though if they're selling a fungible commodity there's risk that they could be taxed out of the market.

If you can't tax businesses then the only alternative is to tax wealthy individuals. But again as far as a local tax is concerned they have the ability to live elsewhere to avoid the tax.

I suppose my conclusion is to use tax dollars to make the state as nice a place to live and work as possible. Then people and companies will choose to live here despite tax disadvantages. But more than likely we're in a downward spiral.